HMRC details changes to off-payroll working rules

From 6 April 2020, all public authorities and medium and large-sized private sector clients who take on workers via intermediaries will be responsible for deciding the employment status of workers.

The off-payroll working rules have been introduced to ensure that workers providing services through an intermediary pay broadly the same tax and National Insurance contributions (NICs) as an employee.

Some rules already apply to all public sector clients, but from 6 April next year they will be extended to medium and large-sized private sector clients, including some charities and third sector organisations.

In July, the Federation of Small Businesses (FSB) urged policymakers to delay roll-out of the switch, warning that its introduction following a period of sustained political uncertainty and stuttering economic growth risks significant disruption to a quarter of a million sole traders.

The FSB's submission to the government also flagged issues with HMRC’s check employment status for tax (CEST) tool, used to determine whether or not IR35 should apply.

“Pressing ahead with IR35 changes in April with no regard for the other pressures facing businesses is a reckless move," warned FSB national chairman Mike Cherry.

However, according to the government, reforms to off-payroll rules will reduce non-compliance and ensure fairness for all workers, regardless of the sector they are engaged in.

"The government is committed to supporting business and ensuring the UK continues to be an attractive place to start and grow a business. A flexible labour market is a key part of that commitment. The off-payroll working rules do not affect the self-employed and do not stop anyone working through a company," the government said in a recent paper.

HMRC said earlier that the changes are expected to affect 170,000 individuals working through their own company, as well as up to 60,000 organisations that use workers employed by a PSC.

Check how the April 2020 changes will affect you and what you have to do to prepare for them.